When a Country Is on the Downward-Sloping Side of the Laffer

question 139

Multiple Choice

When a country is on the downward-sloping side of the Laffer curves, a cut in the tax rate will

• A)decrease tax revenue and decrease the deadweight loss.
• B)decrease tax revenue and increase the deadweight loss.
• C)increase tax revenue and decrease the deadweight loss.
• D)increase tax revenue and increase the deadweight loss.

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Definitions:

Operating Expenses

Costs that a business incurs through its normal business operations, excluding the cost of goods sold.

Renovation Cost

Expenses incurred in updating or improving a fixed asset, such as buildings or equipment, to increase its value or extend its useful life.

Working Capital

The contrast between a firm's current holdings and its due obligations, highlighting the accessible funds for running its business activities.

Straight-Line Depreciation

A tactic for parceling the cost of a tangible property throughout its lifespan in steady yearly payments.